Greatest Depression just beginning: Merrill Lynch Economist

no worries chart elliott wave

will program computers for food

“Frugality is the new fashion and likely to stay that way for years,” highlighting a secular shift toward prudence and conservatism because households are traumatized, tapped out, and mindful of a bleak outlook.

The few greedy cheaters among us have been a major factor in the creation of the impression of economic growth that led to this economic correction (and potential deflation). However, government leaders of developed nations who promoted economic growth in a direction that increased environmental impacts are also to blame.

Most “consumers” (as we are not citizens anymore) are complacent and docile. They are happy to watch cable, eat lots of junk food, and stay distracted by playing with their cellular phones and gadgets. We let a few powerful oligarchs in control of the Western governments through powerful lobbies, media-empires, political blackmail, favours, and campaign contributions. Essentially they run the world. These oligarchs are pushing us towards a neo-feudal surveillance society of corporate rule. It isa world where we work our entire lives to buy low quality “consumer goods” that break before it is paid for (this is called programmed obsolescence) and have little free time to do anything other than pay our bills, loans, and massive interest payments while the natural world is destroyed in the process. It will be quite simply a life of debt-bondage for the average person


The Recession Is Over, the Economic Depression Just Beginning

Economics / Great Depression II Jan 12, 2010 Market Oracle

In late 2009, former Merrill Lynch economist, now with the Canadian firm, Gluskin Sheff, said the following:

“The credit collapse and the accompanying deflation and overcapacity are going to drive the economy and financial markets in 2010. We have said this repeatedly that this recession is really a depression because the (post-WW II) recessions were merely small backward steps in an inventory cycle but in the context of expanding credit. Whereas now, we are in a prolonged period of credit contraction, especially as it relates to households and small businesses.”

real household debt since 1960 usa

Summarizing his 2010 outlook, Rosenberg highlighted asset deflation and credit contraction imploding “the largest balance sheet in the world – the US household sector” in the amount of “an epic $12 trillion of lost net worth, a degree of trauma we have never seen before,” even after the equity bear market rally and “tenuous” housing recovery likely to be short-lived and illusory with a true bottom many months away.

As a result, consumer spending will be severely impacted. “Frugality is the new fashion and likely to stay that way for years,” highlighting a secular shift toward prudence and conservatism because households are traumatized, tapped out, and mindful of a bleak outlook. It shows in new consumer credit data, contracting $17.5 billion in November, the largest monthly amount since 1943 record keeping began.

Surprisingly, only people over age 55 have experienced job growth. All others have lost jobs, can’t get them, and for youths the “unemployment crisis (is) of epic proportions.” In addition, there’s a record number of Americans out of work for longer than six months, in part because the “aging but not aged” aren’t retiring, and those who did are coming back, of necessity, to make up for wealth lost.

times magazine says the new frugality

Rosenberg stresses that for a sustainable recovery to begin, the ratio of household credit to personal disposable income must revert to the mean and reach an excess in the opposite direction. In the 1950s, it was 30%. Today its 125%, down from the late 2007 139% peak, with a long way to go taking years, and when it’s over, another $7 trillion in household credit will have to be extinguished.

A well-known business magazine recently published a story with this headline:

Stocks: The “Loss” Decade by Robert Folsom

A disastrous ten years for the stock market ends in just a month. Will the turning of a new decade change investors’ luck?

One sentence from the story itself tells you most of what you need to know: “The ten years since Y2K are on track to produce the worst total returns for investors since the 1930s.”

Of course, no one should really be surprised by a story that says the stock indexes did poorly over the past decade. That’s not news. The facts in the article more or less repeat what our own Elliott Wave Financial Forecast reported last March, complete with this chart:
no worries chart elliott wave

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